Neco Model Questions Vol1 2017 Government Question 25

Practice objective / multiple choice question 25 from the 2017 Neco Model Questions Vol1 Government examination.

Neco Model Questions Vol1 2017 Government Objective / Multiple Choice Hard Difficulty
Question 25 NECO_MODEL_QUESTIONS_VOL1 • 2017 • GOVERNMENT • objective

A public agency is considering a new infrastructure project. The project requires an initial investment of \(120\) million naira and incurs an annual operating cost of \(8\) million naira for 10 years. It is expected to generate an annual benefit of \(20\) million naira for the same 10‑year period. Using a discount rate of 8\% per annum, calculate the Net Present Value (NPV) of the project and state whether the project should be undertaken.

Answer Options

A. NPV ≈ -62.0 million naira; the project should not be undertaken.
B. NPV ≈ 12.3 million naira; the project should be undertaken.
C. NPV ≈ -5.8 million naira; the project should be undertaken.
Correct Answer D. NPV ≈ -39.5 million naira; the project should not be undertaken.
Correct Answer
D
Correct Option:
NPV ≈ -39.5 million naira; the project should not be undertaken.

About This Question

This is Neco Model Questions Vol1 2017 Government Question 25. It is one of the objective questions from the 2017 Neco Model Questions Vol1 Government examination.

Difficulty level: Hard .

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